CHS Sues Over Conflict of Interest

Official says former employee didn't disclose financial ties to a Mexican company

CHS Inc. is suing one of its former top managers, alleging he was negotiating contracts for CHS with a Mexican grain broker in which he was a business partner, according to the Star Tribune.

CHS, a cooperative based in Inver Grove Heights, MN, said in the lawsuit it is still figuring out the damages it suffered from the relationship between Joaquin Galindo and Gradesa S.A. de C.V., a Mexican brokerage that purchased large volumes of grain from Mexican farmers and sold them to CHS.

CHS transacted tens of millions of dollars of business with Gradesa, according to the lawsuit filed last month in Ramsey County District Court.

Galindo worked for CHS for 20 years until 2015, and oversaw substantial business in Latin America without disclosing his business ties with Gradesa that began around 2008, according to the lawsuit.

"While Mr. Galindo was purporting to negotiate opposite Gradesa on CHS's behalf, he was actually investing substantial amounts of money in Gradesa-affiliated entities," the complaint said.

As such, the company said, Galindo benefited financially from contracts favorable to Gradesa and had a conflict of interest that amounted to breach of his duty of loyalty to CHS.

Minneapolis attorney Art Boylan, representing Galindo, said that he is in the preliminary stages of analyzing the case, but that it appears to be a new tactic by CHS after previous litigation in Mexican courts has not been favorable for the company.

"There are other proceedings in Mexico involving other companies and CHS has been unsuccessful in that litigation," Boylan said. "As a result we view this as an attempt by CHS to find a new forum in order to take advantage of just a single employee, and that's inappropriate."

The lawsuit alleges that Galindo helped to orchestrate payments from CHS to Gradesa for services that CHS never received. In 2015 alone, those payments were in the millions of dollars, the complaint said.